Correlation Between Visa and Calamos LongShort

Can any of the company-specific risk be diversified away by investing in both Visa and Calamos LongShort at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Visa and Calamos LongShort into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Visa Class A and Calamos LongShort Equity, you can compare the effects of market volatilities on Visa and Calamos LongShort and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Visa with a short position of Calamos LongShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Calamos LongShort.

Diversification Opportunities for Visa and Calamos LongShort

0.17

Correlation Coefficient

Visa  Calamos LongShort

Average diversification

The 3 months correlation between Visa and Calamos is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Calamos LongShort Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos LongShort Equity and Visa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Visa Class A are associated (or correlated) with Calamos LongShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos LongShort Equity has no effect on the direction of Visa i.e., Visa and Calamos LongShort go up and down completely randomly.

Pair Corralation between Visa and Calamos LongShort

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.22 times more return on investment than Calamos LongShort. However, Visa is 1.22 times more volatile than Calamos LongShort Equity. It trades about 0.06 of its potential returns per unit of risk. Calamos LongShort Equity is currently generating about -0.12 per unit of risk. If you would invest  31,508  in Visa Class A on September 29, 2024 and sell it today you would earn a total of  358.00  from holding Visa Class A or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Calamos LongShort Equity

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Calamos LongShort Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calamos LongShort Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Calamos LongShort is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Calamos LongShort

The main advantage of trading using opposite Visa and Calamos LongShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Calamos LongShort can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Calamos LongShort will offset losses from the drop in Calamos LongShort's long position.

The idea behind Visa Class A and Calamos LongShort Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.